Which of the Following Is a Reason a Firm May

question 5

Multiple Choice

Which of the following is a reason a firm may enter a licensing agreement?

• A) Licensing allow firms to enter a foreign market without direct foreign investments.
• B) A firm enters a licensing agreement to expand once it has substantial capital.
• C) Licensing is the next step a firm must take, after it has established sufficient research and development.
• D) Licensing is a technique that firms use when applying management skills and marketing strategies.
• E) Licensing agreement is a risk free method to expand in foreign markets.

---

Definitions:

Derivative Suit

A legal action brought by shareholders on behalf of a corporation against third parties, typically for harm done to the corporation.

Corporate Management

The administration and control of a corporation, involving decision-making by executives and oversight by a board of directors.

Newly Issued Stock

Shares that have been recently released by a company to the public for the first time through an initial public offering (IPO) or additional issuance.

Proxy Solicitation

The process by which one shareholder asks another for his or her voting right.